UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
June 27, 2002
(Date of earliest
event reported)
Commission File Name of Registrant; State of Incorporation; Address of IRS Employer
Number Principal Executive Offices; and Telephone Number Identification Number
- --------------------- --------------------------------------------------------- -------------------------
1-16169 EXELON CORPORATION 23-2990190
(a Pennsylvania corporation)
10 South Dearborn Street - 37th Floor
P.O. Box 805379
Chicago, Illinois 60680-5379
(312) 394-7398
333-85496 EXELON GENERATION COMPANY, LLC 23-3064219
(a Pennsylvania limited liability company)
300 Exelon Way
Kennett Square, Pennsylvania 19348
(610) 765-8200
Item 5. Other Events
On June 27, 2002 Exelon issued the following note to its financial community:
[EXELON LOGO]
- --------------------------------------------------------------------------------
Exelon Corporation www.exeloncorp.com
P.O. Box 805379
Chicago, IL 60680-5379
June 27, 2002
Note to Exelon's Financial Community:
Exelon Generation Company, LLC Agrees to Purchase
Sithe New England Holdings, LLC
Exelon Generation (Exelon) has agreed to purchase Sithe New England Holdings, a
subsidiary of Sithe Energies, Inc. (Sithe), in exchange for a $543 million note,
plus the assumption of approximately $1.15 billion of project debt. In addition
to this transaction, Exelon and Sithe's other shareholders contemplate entering
into additional transactions to restructure the original Sithe transaction,
although to date no agreement has been reached with respect to such
transactions. The acquisition of Sithe New England Holdings enables potential
future restructuring without additional risk to Exelon. Exelon has negotiated
closing conditions to the acquisition agreement that allow Exelon flexibility to
terminate the purchase if certain events do not happen as contemplated. The
Sithe New England Holdings acquisition is not expected to affect Exelon's
earnings guidance for 2002.
On June 26, 2002, Exelon and Sithe filed a notice of change of status with the
FERC to purchase Sithe New England Holdings, including its generating facilities
and power marketing operations. The parties are seeking FERC and other required
approvals by October 31, 2002. If approved, the transaction could be completed
in November 2002.
Exelon has been a 49.9 percent owner of Sithe since December 2000. In connection
with the original investment, Exelon and Sithe's other shareholders executed a
Put and Call Agreement (PCA) that gives Exelon the right to purchase (Call) the
remaining 50.1 percent of Sithe, and gives the other Sithe shareholders the
right to sell (Put) to Exelon. If the Put option is exercised, Exelon does have
the obligation to complete the purchase. The PCA, which remains in effect,
provides that the Put and Call options become exercisable as of December 18,
2002. Exelon's current financial outlook includes the assumption of the purchase
of Sithe under the PCA in mid 2003. The Sithe New England Holdings acquisition,
when considered with the other potential restructuring transactions, is not
expected to affect Exelon's earnings outlook for 2003.
Potential Benefits of Restructuring
If the restructuring is completed, the benefits to Exelon are expected to be as
follows:
o Enables the acquisition of only the assets in the Sithe portfolio that fit
Exelon's strategy rather than acquiring the whole company and divesting
non-strategic assets in subsequent
transactions. This would reduce the size of the transaction and the amount
of Exelon debt required to finance the acquisition;
o Allows Exelon to more quickly integrate the Sithe assets and achieve
steady-state staffing and cost levels - accelerates realization of
acquisition synergies;
o In addition to the economic and operating reasons, the restructured
transaction would allow Exelon to integrate the Sithe assets in a
tax-efficient manner;
o Longer-term economic benefits are expected to include interest savings
from issuing less acquisition debt, the elimination of losses from some of
the non-strategic assets and acceleration of acquisition synergies.
Sithe Assets Included in the Transaction
The facilities covered under the transaction include Sithe's New England plants
in operation and in various stages of construction:
Sithe New Boston, South Boston, Mass.; Sithe Framingham, in Framingham, Mass.;
Sithe West Medway, in West Medway, Mass.; Sithe Wyman, in Yarmouth, Maine; Sithe
Mystic, in Everett, Mass.; Sithe ForeRiver in Weymouth, Mass. and Sithe Power
Marketing. The plants are fossil-fueled plants, utilizing a combination of fuel
oil and natural gas.
Together, present capacity and capacity in development at these plants total
4,471 megawatts, 2,050 MWs operating and 2,421MWs under construction. The units
under construction are expected to be completed in late 2002.
For additional information please contact me at (312) 394-7696 or Marybeth
Flater at (312) 394-8354.
Sincerely,
Linda C. Byus, CFA
VP of Investor Relations
================================================================================
This note contains certain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements are based on
management's current expectations and are subject to uncertainty and changes in
circumstances. Actual results may vary materially from the expectations
contained herein. The forward-looking statements herein include statements about
future financial and operating results of Exelon. Economic, business,
competitive and/or regulatory factors affecting Exelon's businesses generally
could cause actual results to differ materially from those described herein. For
a discussion of the factors that could cause actual results to differ
materially, please see "Risk Factors" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" in Exelon Generation Company's
Registration Statement on Form S-4, Reg. No. 333-85496 and Exelon's and Exelon
Generation Company's filings with the Securities and Exchange Commission,
particularly those discussed in "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Outlook" in Exelon's 2001 Annual
Report. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this note. Exelon
does not undertake any obligation to publicly release any revisions to these
forward-looking statements to reflect events or circumstances after the date of
this note.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EXELON CORPORATION
EXELON GENERATION COMPANY, LLC
/S/ Ruth Ann Gillis
-----------------------------------
Ruth Ann Gillis
Senior Vice President and Chief Financial Officer
Exelon Corporation
June 27, 2002
